The Evolution of the Software Industry: An Insider’s Perspective
The signs are clear: software growth is slowing down. The venture capitalists no longer view the software industry as the money-making machine it once was. Fewer and fewer software companies are going public, and they’re no longer the big-risk, big-payoff opportunities they once were.
If someone wants to put all their chips on black, win big and walk away from the table, they need to look at mobile or social companies (for the next few years, anyway). Even though software growth has slowed, it has become more stable. Rather than a sought-out luxury, most software offerings are seen as necessity. It is almost unthinkable to purchase a computer without also purchasing Microsoft Word or a similar word processor. For an accounting software solution, small businesses often turn to QuickBooks, while larger companies will look to SAP, Oracle or Microsoft Dynamics.
What, then, turned the rebellious young software industry into a nine-to-five grownup? I was there, so I can tell you.
The software industry, in many ways, represents the most fundamental transition of U.S. culture and business in recent memory. As computers became more accessible to consumers, software was viewed as the great savior, replacing or simplifying tedious tasks so that humanity in general could focus on greater achievements than filling in forms or sifting through file cabinets.
The rise of the internet brought about even more possibilities for the industry, and the software boom of the ‘90’s signified the modern day gold rush: if you got there first, you could make it big. My company, Journyx, was founded during this time; 1996, to be exact. The premise behind my company (creating a web-based timesheet that could be accessed anywhere) was indicative of the trends of the time. The software is an efficient system meant to replace worn out, time-consuming methods of the past.
However, many players in the software game quickly realized that introduction of an efficient “replacement” type of software would not be enough. As programs with similar functionality arrived on the scene, it became clear that software had to move beyond the manual systems that everyone was used to, and delve into the realm of advanced functionality to differentiate itself from competitors.
In the 1990’s, innovation was met with open arms. Claims of miraculous productivity were often taken at face value, and venture capitalists were anxious to fund projects for a piece of the pie. Unfortunately, this resulted in bloated programs indicative of high excitement from vendors and customers combined with a lack of forethought. At the time, no one was saying to scale back and scope creep was rampant. If a team had the ability to toss the kitchen sink into a program, they did it.Continued on the next page